Sajjad Karim (ALDE), rapporteur. – Mr President, as the geopolitical centre of gravity shifts to Asia in the 21st century, if you look at India you see the future. Considering its size and complexity, India’s stable and vibrant society remains a monumental achievement. Its commitment to democracy, pluralism and the rule of law guarantees consistency in trade relations. Yet, for a country approaching a fifth of the world’s population, India counts for less than one fiftieth of world trade.

As India’s largest trading partner and principal source of foreign investment, the EU is poised to help India reap the benefits of liberalisation. With our shared history and commitment to secular government and religious pluralism, the EU and India are natural partners. We became strategic partners in June 2004, yet it was another year before a joint action plan was agreed. Even today, the Commissioner lacks the authorisation to turn the work of the high-level trade groups into a concrete deal. In the meantime, President Bush has succeeded in brokering a quite frankly worrying US-India nuclear deal.

The Commissioner claims India as his destination of choice – and of course I mean Commissioner Mandelson here – yet has fuelled EU obsession with China. India poses equal, if distinct, challenges for the EU and the Commission must reflect that as it lays out its new strategy by working with stakeholders to mirror its China consultation.

The Doha round remains the chief mechanism for shaping equitable globalisation. The multilateral trading system is a most just and effective way of expanding and managing trade and it shields the weak from the use and abuse in the unilateral scramble for trade domination. However, a Doha deal does not preclude bilateral WTO-plus arrangements. Only through greater openness to partnerships that go beyond what a lowest common denominator WTO deal could now provide, will the EU begin to address the global competitiveness agenda of the future.

A free trade agreement with India must be central to the Commission’s new global Europe strategy. This House must back the Commissioner 100% as he makes the case to the Council for a negotiating mandate to deliver bilateral FTAs, opening markets and securing fairer trading conditions in new areas of growth throughout Asia.

India must match our resolve and bolster its promises for Helsinki. India has proved itself adept at juggling global players to boost competitiveness. It is time for a deal with its most obvious partner. Deadlines must be set so that we can achieve common ambitions in the areas that will dictate the terms of the 21st century: protection of intellectual property rights, open markets for services and investment, and effective trade defence instruments.

No strategy for economic growth is complete without addressing the growing crisis of climate change. The impact of growth in Asia on energy supply is phenomenal. India’s future growth is dependent on meeting spiralling energy needs. Severe shortages and over-dependency on petrol and coal are driving up costs and pollution. An effort to develop nuclear energy is symptomatic of that crisis. However, even if India did develop nuclear energy it would meet only 2% of total energy requirements. It would also constitute a climb-down from Gleneagles pledges to halt climate change and promote energy conservation.

Both India and the EU have long traditions of promoting renewable energy. India has built the world’s fourth largest wind power industry, developed biogas digesters and solar cells and supported the development of renewable energy in Asia. We must work together to define the global energy architecture through innovation and sustainable energy development whilst meeting climate change benchmarks.

India’s economic growth is booming at 8% and is set to double in a decade. Dotcom benefactors make up India’s rich list, cashing in as India becomes the global hub for ITC development. Yet India’s economy remains full of paradoxes. The uneven distribution of the benefits of globalisation has left nearly four million people living on less than one dollar per day.

The EU must ensure that the benefits of our trading relationship are shared with Indians – all of them. International trade can be a powerful driver of economic growth and poverty reduction but it is not a silver bullet. To continue to lift people out of pockets of poverty, India’s trade reforms must complement development policies.

Linking external and internal policies is not aided by India’s infrastructure, which displays characteristics of a developing nation while seats of enterprise dominate the skylines of Mumbai and Bangalore. Investment must focus on rural areas, providing better water supplies and sanitation, improving transport links and the quality of grid power output.

India is committed to the Millennium Development Goals and its own five-year plan exceeds UN expectations, but there is increased doubt that India will meet four out of the eight goals on schedule. Serious concerns remain over child labour and the spread of HIV/AIDS has a potential to disrupt India’s progress.

Trade relations cannot be divorced from human rights and development concerns. We have a duty to India to reverse those trends. EU assistance must be directed to lagging regions and under-represented social groups. Capacity-building efforts must focus on the poorest states, enabling them to use funds effectively. Foreign investment must provide funds for education and rural health.

As India moves from developing to developed, it bears regional responsibility and sustained growth. It must take its neighbours with it. SAFTA will bring manifold expansion in the region. True, it has not been smooth sailing and Indo-Pak disputes have stalled progress, but strong leadership in the region has led to trade now being used as a confidence-building measure, particularly over Kashmir.

Europe must look at Asia and consider its astonishing growth as an opportunity rather than a threat. The EU needs more confidence about its ability to manage change and remain competitive. Inevitably it will require some restructuring and a change of mindset.

Joe Borg, Member of the Commission. Mr President, I would like to thank the rapporteur, Mr Karim, and the International Trade Committee, for the excellent work that has been done.

The report is comprehensive, addressing almost all possible aspects of EU-India economic and trade relations. This report is also timely, as it takes place ahead of the forthcoming EU-India Summit in Helsinki on 13 October 2006, and we will take its recommendations into consideration. Our cooperation with India is manifold and it is difficult to address it exhaustively in this speech. Therefore, I will point to some of the main features that respond to your concerns and also update the House in more detail on the trade and investment issues.

Generally, our cooperation is good and is making progress. Regarding the environment, for instance, last year India hosted the first EU-India forum on waste management, which was followed by various visits by and meetings of the working party on that issue. The holding of the second Environment Forum is under discussion.

Regarding employment and social issues, the Commission and the Indian Labour Minister agreed in a bilateral meeting a work programme for 2006 and 2007 based on the Joint Action Plan. A draft memorandum of understanding is to be signed, or initialled, at the forthcoming Helsinki Summit. More broadly, following a bilateral meeting between Commissioner Almunia and the Indian Finance Minister, the launch of regular macroeconomic dialogue has been proposed.

The business side has not been forgotten and thanks to Commissioner Mandelson, who pushed forward the idea with his counterpart Trade Minister Nath, the EU-India CEO Round Table, allowing active business-to-business dialogue, is now ready to be launched at the Business Summit on 12 October 2006.

Our development cooperation is concentrated on sector support for elementary education, health and family welfare. Poverty alleviation has been the central objective in all projects. The Country Strategy Paper (CSP) for 2007 to 2013 reaffirms that commitment with an approximately 65 to 70% allocation to the health and education sectors. Encouragingly, our State Partnership Programmes with Rajasthan and Chhattisgarh, amounting to a total contribution of EUR 160 million towards supporting water management, education and health, have been signed and can now be implemented.

Turning to trade and investment relations with India, I welcome the fact that the conclusions of the report adopted by the International Trade Committee fully support the Commission's approach. More specifically, the Committee has called on the European Union to enter into a free trade agreement (FTA) with India. India is keen to launch a free trade agreement with the European Union as soon as possible. This has been the Indian position for a long time, pushed by Prime Minister Singh himself.

I welcome the committee's first comment that negotiations on the Doha Development Agenda (DDA) are not incompatible with bilateral WTO-plus negotiations. The European Union seeks to build on and complement its commitment to the multilateral WTO trading system with a new generation of bilateral FTAs, in particular with key growing markets in Asia. The European Union continues to see the WTO as the fundamental platform on which to build global liberalisation.

There will be no retreat from multilateralism. An EU-India FTA can build on WTO multilateral liberalisation by addressing areas, such as trade and services, public procurement markets, competition policy and regulatory harmonisation, that are related directly to EU trading strengths not yet fully addressed by WTO rules or standards.

We have made sure that the economic case for an EU-India FTA is watertight and that there is a similar level of understanding and ambition on India's part, which is necessary for any negotiation to work. To that end, I welcome the committee's support for the High Level Trade Group's work. On 19 September 2006, the High Level Trade Group finalised its report to the EU-India Summit on 13 October 2006, which recommended that an expanded-trade partnership be developed through the negotiation of a broad-based trade and investment agreement.

The summit will recommend that both EU and India move towards negotiations for such an agreement. Although we will not be launching an FTA at the summit, we will, however, be making positive signals that we are heading in that direction. We do not just want to launch but to prepare the ground for successful negotiations. This may mean further work on some of the more sensitive issues after the summit, so that we improve understanding of each other’s expectations and possibilities for movement. Accordingly, I share the committee’s views that there is a need to deepen discussion on services negotiations, intellectual property rights and public procurement.

Finally, I also share the committee’s concern about the low level of intra-regional trade in the South Asian Association for Regional Cooperation and its recommendation to SAARC to review opportunities to expand trade and investment in the region. We are following closely the problem of Pakistan’s non-implementation of schedules under the South Asia Free Trade Agreement and addressing this informally with this country.

Erika Mann, on behalf of the PSE Group. – Mr President, I would like to thank the Commissioner, and also thank the rapporteur for this excellent report, which touches on all the issues that are relevant when talking about India.

The Commissioner mentioned one specific point to which I think we should give in-depth consideration, and that is that India might finally become a geopolitical centre in the 21st century. I think he is right about that and the European Union and the Commission will have to make up their minds. You cannot say ‘either India or China’; that is not the right approach. But we will certainly have to focus, because to deal with both countries and many more countries to come as regards bilateral agreements might be something that is impossible for the Commission whilst making sure that the multilateral round flourishes. So I would like to point out to the rapporteur and the House that my Group will be a little more cautious when it comes to a free-trade agreement.

We are not against a free-trade agreement; quite the opposite. We already argued in favour of a free-trade agreement and regional agreement in 2002, when I presented my own report to this House, but I think we should first have an in-depth debate and discussion on the issue. The Commission will produce its new policy report on 4 October, in only a few weeks. So we will not support a free-trade agreement at the moment, because we want to have a debate in our Group first and we want to be clear that Parliament will be fully involved in the debate and the consultation process.

It is important and relevant to see a shift from the multilateral to the more bilateral agreement and to make sure that there is some coherence when it comes to trade policy. That is one of the reasons why tomorrow we are not going to support the idea of a free-trade agreement at this stage. I am happy also that Mr Karim touched on the various high-tech issues. I think it is absolutely essential that we focus more on India and cooperate more closely with it.

Now, everything I said is not on behalf of Glyn Ford, who is the shadow rapporteur. He apologises to Mr Karim for not being here. He has to go back to England, but he will certainly follow up the issues and discuss them in detail.

As his report clearly demonstrates, when we are discussing India, the first problem is to decide which India we are discussing. Is it the India with nearly four million households earning over EUR 150 000 a year and with more graduates than any other country? Or is it the India with 390 million people living on less than a dollar a day, where two out of five of people are illiterate and where the so-called IT revolution only touches one in fifty Indians? I hope, as a Parliament, we are interested in both.

If India overcomes its infrastructure problems, most notably its persistent power cuts and poor transport networks, then I believe that within a generation it has the potential to be Europe’s largest trading partner, more important than China or the United States. I therefore welcome what Commissioner Borg said about the High Level Trade Group’s recommendations. I believe we should intensify our trade and investment relations with India. However, at this stage, I agree with Mrs Mann and Mr Papastamkos that we should stop short of a free-trade area, because we would not want India to be used as an example to denigrate the prospect of a successful DDA outcome. We must put our eggs in the DDA basket first and foremost, and anything else should be seen as a digression from that.

Mr Papastamkos rightly points out that 77% of Indian goods come into the EU market duty-free through the GSP. The GSP places an obligation on India to improve its core labour standards. India must do more to tackle child labour and bonded labour, and must sign up to ILO Convention 98 on the right to organise and the right to collective bargaining. India signed up to the Millennium Development Goals and the EU, with our cooperation, should help by facilitating universal education, Eurohealth programmes and policies to get young people from poor areas into work.

I believe that trade and development go hand in hand, but only if we work at it. It will not be automatic. We must have the political will to deliver on both. I welcome the report’s emphasis on both those aspects of our relations with India.

Charles Tannock (PPE-DE). – Mr President, the EU’s strategic partnership with democratic India is of vital importance for both the EU and India. I welcome the strengthening of political and economic dialogue and engagement as well as discussions on human rights at the India-EU Summit on 13 October. However, given the astonishing recent growth of India’s economy and its emerging global big-power status, our partnership must now deepen. Therefore I strongly favour a bilateral India-EU free trade agreement. That would have mutually beneficial results as our economies are complementary, as India needs our high-tech finished products and we need their services and basic machinery. We are already India’s biggest trading partner, at some EUR 40 billion annually, and we collaborate now on high-tech projects such as Galileo and ITER, demonstrating the sophistication of India’s 8% annual growth economy.

I also call for enhanced regional cooperation and economic integration of India and Pakistan with SAARC and SAFTA, which enhances the confidence-building measures between the two states which, until recently, were on the verge of war. The line of control between the divided regions of Jammu and Kashmir could eventually be just a line on the map, if people, goods and services could flow freely.

Pakistan should desist from its restrictive positive list of freely traded goods and change to a more liberal negative list as expected by MFN and SAFTA rules. India is fast becoming the prime south-Asian geopolitical player and it is high time that the UN Security Council admitted the largest democracy in the world to its ranks as a permanent member. China is our second largest trading partner, but the EU does not share the same fundamental values with it as we do with India. That fact needs greater recognition in this House.

Coming from Britain, with our traditional links to India, I commend the Karim report and call on the Commission to develop a much deeper political and economic India-EU relationship culminating in a bilateral free trade agreement.

Geoffrey Van Orden (PPE-DE). – Mr President, I wish to begin by congratulating Mr Karim on the excellent and extensive report on the EU’s economic and trade relations with India. We neglect the relationship with India, with its opportunities for both India and Europe, to our mutual cost.

In the future, if the EU concentrates more of its efforts on economic policy instead of other distractions, I see the potential for a massive free-trading alliance. The United Kingdom, with its historic links, will play a key role in this development. I am therefore delighted that the British Conservative Leader, David Cameron, is devoting particular attention to relations with India. He seized the opportunity while with the business community in Mumbai recently to set out his views on globalisation. He also touched on the challenge of terrorism.

Terrorism is the curse of our age. If afflicts many European countries. It has become a tragic fact of life in India as well, not just in Kashmir but in Mumbai where 200 people were murdered in July and in Malegaon on 8 September 2006, where some 40 people were killed. The precise responsibility for these attacks is still unclear, but there is strong suspicion of external involvement.

Post-9/11, Pakistan has helped the democracies to fight terrorism along its western border with Afghanistan, but it has done precious little to dismantle the infrastructure of terrorism on its eastern border with India or to control the extremist madrassas that provide the hotbed in which terrorists are cultivated.

In order to proceed with the welcome and ongoing peace process between India and Pakistan, Pakistan must implement the solemn assurances it has given to stop all cross-border terrorism and to deliver on the words of President Musharraf in this Parliament on 12 September 2006.

As one of the great democracies, India attracts the rage of extremists. This threat can be defeated only by the concerted efforts of our nations and agencies working together in close cooperation.

I welcome the opportunities we have for deep engagement with India and for India’s wider regional role.

Joe Borg, Member of the Commission. Mr President, thank you for your comments, from which it is clear that we all attach great importance to comprehensive relations between the Union and India.

Only last week, on 19 September 2006, the EU-India High Level Trade Group finalised its report to the 13 October 2006 EU-India Summit and concluded that an expanded trade partnership should be developed through the negotiation of a broad-based trade and investment agreement. This forms the basis for the High Level Trade Group's recommendation to the EU-India Summit. It augurs well for an agreement at the summit that there is a strong case for launching bilateral FTA negotiations and that the parties are ready to take the necessary steps to start negotiations.

The areas forming the basis of bilateral EU-India relations, as covered by the three EU-India Subcommittee meetings, range from economic policy, dialogue and cooperation, including on industrial policy, science and technology, finance and monetary affairs, the environment, clean development and climate change, energy cooperation, information and communication technologies, civil aviation, maritime transport, space technology, agriculture and marine policy, customs, employment and social policy, business cooperation and development cooperation, to trade and investment and the bringing together of peoples and cultures. Many of those areas will no doubt form the subject of discussions at the EU-India Business Summit on 12 October 2006 and the Political Summit on 13 October 2006, with a view to making progress in all areas of EU-India relations.

It is in our mutual interest to build on a rich history of experience and partnership with India. The issue of the free trade agreement with India presents us with a number of possibilities. An agreement with India would present various advantages, such as the consolidation of the European Union's privileged position in an important and growing market. India is the only major emerging economy with the European Union as both its largest trading partner and its largest investor. Whilst there have been sizeable reforms, access to India's market is still very restricted, with applied tariffs in certain sectors at over 30% and many caps on foreign direct investment (FDI) in the services sector. The reduction of tariffs for EU companies and the liberalisation of trade in services would secure access to a rapidly growing market and thereby contribute to competitiveness.

A secondary benefit would be to lock in India's economic reforms to the advantage of its and the region's long-term economic growth. The visibility and economic benefits of an FTA with the European Union would support India's programme of reforms and provide a more stable investment climate.

The Doha development agenda does not preclude bilateral free trade agreements, and the conclusion of such free trade agreements does not and would not prejudice the completion of the Doha development agenda. The European Union and India remain committed to the rules-based multilateral trading system. The successful outcome of the DDA multilateral trade negotiations remains their foremost trade-policy priority. India and the Union will continue to collaborate closely on mutual interests and to play leading roles regarding the DDA.

In the speech which Commissioner Mandelson delivered in Berlin on 18 September 2006, he indicated that the central strand of the October trade policy review would argue that the EU should seek to build on and complement its commitment to the multilateral trading system with a new generation of bilateral free trade agreements with key growing markets.

While Europe continues to be highly competitive in global export markets, European companies are losing ground in the highest technology products and the fastest growing markets. In rapidly growing regions such as Asia, the European Union is underperforming. There is now a case for new bilateral free trade agreements designed to deliver more open markets. FTAs can build on WTO multilateral liberalisation by addressing areas, such as trade and services, public procurement and competition policy, that are not yet fully addressed by WTO rules. In this respect, the deepening of EU-India bilateral trade relations supports the larger multilateral trading regime.

Finally, as many of you have said during the discussion, strengthening EU-India relations represents a great hope: that of reducing the wealth gap existing in that country, of improving the conditions for workers and ensuring better standards of protection for all workers, in particular for women and children, and of improving the quality of life of the Indian people in general which, as has rightly been pointed out, is still such that 190 million people live on less than USD 1 a day.

Glyn Ford (PSE). – First, let me congratulate Mr Karim on his report on EU-India trade relations. In contrast to last month’s debate on EU-China relations, his work and report have been a model of cooperation and consensus and my Group and I will be supporting his report. I only have to apologise that I will be absent for tomorrow’s vote, as I will be attending the Labour Party Conference in Manchester.

I have one general comment and two specific points on the report. First, we in the PSE Group do not want any hint that a bilateral FTA can substitute for a successful completion of the Doha Development Round. We know India is committed in this regard, but not all MEPs share that commitment.

Secondly, while I offered a guarded welcome to back liberalisation, I share some of Mr Markov’s concerns as to the social impact on small farmers and businesses as preferential lending will end. If Mr Markov’s amendment had been more judiciously phrased it would have gained my support.

Thirdly, I do not welcome India’s involvement in ITER. I believe the whole ITER Programme is mistaken and would have been delighted if it had gone to Japan so they would have wasted more of their money and we less of ours. I can only commiserate with the people of India.

James Nicholson (PPE-DE). – Given the strong ties which exist between my own Member State and India, I am naturally keen that the EU does all in its power to help India realise its enormous potential for economic development. Having had the privilege to visit India on a number of occasions, I have been deeply impressed by the rate of economic development there over recent years and particularly in key 21st century industries such as information technology.

I am pleased at the progress which was made in building dialogue at the sixth India-EU summit last year. Improving economic and trade relations will prove to be of mutual benefit to both the EU and India, but it is essential that a key objective of our contribution to economic development is the eradication of poverty. This must be maintained as a top priority of our strategic partnership. I congratulate the rapporteur on his report.